Maryland casino ad war fueled by more than $20.5 million from gambling companies

September 22, 2012

In barely a month, companies with competing stakes in the future of casino gambling in Maryland have already poured more than $20.5 million into the November referendum effort, nearly as much as the candidates spent over the course of the state’s last governor’s race.

The eye-popping sums — which are expected to escalate in coming weeks as the vote draws closer — are being used to fund a seemingly nonstop ad war on television and radio. Some spots tout the jobs and education dollars that would flow from the gambling expansion plan on the ballot; others warn viewers not to get “played” by such promises.

The money has rushed in at a rate of more than $660,000 a day, and on Friday, a group led by Caesars Entertainment reported ponying up an additional $1.2 million for the pro-expansion cause.

Among proponents, the biggest spender has been MGM Resorts, the gambling behemoth that owns several casinos on the Las Vegas strip and is angling to build a new casino in Prince George’s County. So far it has spent $8.4 million.

There is only one funding source so far on the other side, but it is also a huge gambling company willing to lay down millions. Penn National Gaming — whose casino in Charles Town, W.Va., stands to lose from an expansion in Maryland — has kicked in $9.5 million to the effort to defeat the ballot question, which would also allow table games at Maryland’s five previously authorized slots sites.

The casino that MGM wants to build at National Harbor, the mini-city on the Potomac River, would literally transform the region’s landscape, becoming one of the first landmarks motorists see as they cross the Woodrow Wilson Bridge into Maryland.

It also has the potential to be one of the most lucrative on the East Coast, drawing residents from the District and Virginia, where casino-style gambling remains illegal, as well as tourists and other visitors to the Washington area from around the globe.

The developer of National Harbor and the owners of a planned casino in Baltimore have also made smaller contributions to the pro-expansion campaign.

Penn has two properties in Maryland that arguably could benefit from the plan: a slots venue in Cecil County, which could draw more patrons with table games; and a racetrack in Prince George’s, where Penn could bid to build a full-fledged casino.

But most analysts say it is more important for Penn to protect the larger casino it operates in Charles Town, which has been a favorite of Maryland gamblers, particularly those from Montgomery County. That facility stands to take another hit if another large-scale Maryland casino opens about 70 miles away at National Harbor in 2016, as projected.

What’s unfolding in Maryland “is very much like a high-stakes poker game,” similar to what has played out in several other states when lucrative casino licenses are at stake, said William Eadington, an economist at the University of Nevada at Reno.

“There’s always a gamble you’re not going to prevail,” he said. “But if you can spend $30 million to $40 million to win or protect something worth hundreds of millions, it’s not a bad bet.”

The money in Maryland is being channeled through a pair of ballot-issue committees, set up specifically for the referendum campaign.

Unlike races among candidates, there are no limits in Maryland on what individuals or corporations can contribute to such committees. In candidate races, the limit is $4,000 every four years, except for political action committees, which may give $6,000.

That’s one reason the spending on the gambling issue is about to blow past the roughly $22 million that Gov. Martin O’Malley (D) and former governor Robert L. Ehrlich Jr. (R) collectively spent in their 2010 contest.The gambling ads have arrived particularly early and often for Maryland elections in the Washington market, which is far more expensive than Baltimore.

“We’re prepared to spend what is necessary to make sure the truth about Question 7 is not drowned out by a barrage of misleading ads put up by a company protecting its West Virginia casino,” said Gordon Absher, a spokesman for MGM, which has never contributed to a statewide ballot measure before.

Penn has a history of using its vast resources to advance and protect its interests. In 2008, the company contributed nearly $38 million to a campaign to defeat a proposed Ohio casino that could have undercut Penn’s business at a nearby property in Indiana. In 2009, Penn gave $20 million to an effort to allow four new casinos in Ohio, two of which it would own.

Penn was also a contributor in 2008 to the campaign to allow slots in Maryland, giving $2 million. The total spending on that ballot issue was little more than $8 million.

The ballot-issue committee supported this year by MGM, billing itself as “For Maryland Jobs & Schools,” has highlighted in its TV ads the promise of new construction and permanent casino jobs, drawing figures in some cases from studies commissioned by interests that favor passage of the plan.

The “world-class resort casino” will also produce “hundreds of millions for Maryland schools,” according to the ads. That claim, while vague, could prove true over time and is backed up by the estimates of state legislative analysts. 

But the revenue estimated in 2007, when Maryland launched its slots program, has been slow to materialize. For this fiscal year, analysts are expecting less than half of the revenue projected.

The ads by the opposing group, billed as “Get the Facts — Vote No on 7,” have tried to pick apart what it describes as the other side’s “empty claims.”

The ads correctly point out that there is no guarantee that overall spending on education in Maryland will necessarily increase as a result of casino money earmarked for schools.

The Penn-funded ads also decry past instances where the number of casino jobs have been oversold and complain that the plan passed by the General Assembly “cuts taxes for billionaire casino special interests.”

The ads make no mention that Penn’s casino in Cecil County would be among those eligible for a lower tax rate if the ballot question passes. Lawmakers agreed to lower rates for several casinos to compensate them for the increased competition that would come with a Prince George’s venue.

Besides MGM’s contributions, the pro-expansion side has received $400,000 from the Peterson Cos., the developer of National Harbor; and $2.3 million from a group of investors that includes Caesars Entertainment, which is planning to open a casino in downtown Baltimore in 2014.

Caesars is not eager to have additional competition in Prince George’s, but company officials have said the expansion plan is an overall plus because it would allow table games, expanding its customer base.

The expansion plan calls for taking bids for the Prince George’s casino from a swath of the county that includes National Harbor and Rosecroft Raceway, the harness track owned by Penn.

Penn officials have complained that the bidding process will be stacked against them because Prince George’s County Executive Rushern L. Baker III (D) and others have championed National Harbor as their preferred casino site.

Penn officials have also argued that their stated willingness to build a $500 million casino at Rosecroft proves that their interests extend beyond Charles Town.

Requests for interviews with Penn officials were directed to a spokesman for the ballot-issue committee, who declined to discuss Charles Town.

Kevin McLaughlin, the committee spokesman,said the “entire goal” of the Penn-funded campaign is to get facts out about the other side’s claims.

“Claims that are being made about jobs and education funding don’t pass muster,” he said.

Jeff Hooke, a Washington-area gambling consultant, said any suggestion that Penn is not being motivated by Charles Town is “total fiction.”

“Penn National has a lot to lose if the referendum passes,” Hooke said.

Perhaps the biggest wild card in the fight over the expansion plan is the owner of Maryland Live!, the state’s largest casino, in Anne Arundel County.

During the legislative debate over expanded gambling, the casino’s parent company, the Cordish Cos., argued vociferously that the addition of a casino in neighboring Prince George’s would unfairly cut into its customer base in the Washington region.

As of Friday, Cordish had not contributed to either side in the debate. Contacted by e-mail late in the week, David Cordish, the company’s chairman, declined to comment.

John Wagner has covered Maryland government and politics for The Post since 2004.
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